The Financial Conduct Authority has published a new consultation paper, which aims to assist millions more people in getting help navigating their financial lives with support on pensions and investments
The FCA’s proposals will allow firms to offer a new type of help called ‘targeted support’ and make suggestions to groups of consumers with common characteristics.
These could include people who may be currently drawing down on their pension unsustainably, not saving enough for retirement or who have excess cash sitting in a current account.
The changes, which have inbuilt protections for consumers, also aim to support growth by enabling increased investment and innovation.
“We want to help consumers navigate their financial lives and plan for the long term. Some of the most difficult financial decisions we face are how to save, invest and prepare for a comfortable retirement,” said Sarah Pritchard (Deputy Chief Executive of the FCA)
“These once-in-a-generation reforms will help people navigate their financial lives and give them greater confidence to invest. This is a win-win for consumers and firms alike,” she said.
Pritchard said these reforms should set the framework for the next 20-30 years, to support consumers now as well as future generations.
Changes welcomed
The changes have largely been welcomed by the financial industry as a major step in addressing the advice gap.
“For the first time, there’s a detailed framework for how firms can offer meaningful support to consumers without crossing the line into regulated advice. It proposes a new regulated activity, called targeted support, and rightly acknowledges that the binary choice between generic guidance and full advice is failing too many people,” said Steven Levin (CEO of Quilter).
“The scale of the problem is stark. Just 9% of adults received regulated financial advice last year, despite millions holding investible assets. Many face complex decisions around pensions, inflation and investing – with little or no support,” he said.
“While full, holistic advice remains the gold standard, the FCA’s proposals aim to bridge the growing gulf for those unable or unwilling to access it. Targeted support could deliver scalable, structured help to consumer groups with shared characteristics.”
What targeted support means and who can offer it
To participate, firms must obtain a ‘Part 4A’ permission – even if already authorised. They must identify the situations, audiences, and ready-made suggestions they’ll offer. These will not constitute personal recommendations, but rather behavioural nudges underpinned by durable disclosures.
The FCA also introduces a fresh regulatory concept of delivering “better outcomes”, intended to complement, not duplicate, the Consumer Duty’s expectations of “good outcomes.”
The regulator currently does not see appointed representative advice firms providing targeted support, although it will be for HM Treasury to decide. Financial advisers could also play a role in delivering targeted support, provided they have the necessary expertise to help consumers make informed financial choices.
However, it is important to distinguish between targeted support and holistic financial advice. Those already receiving ongoing advice do not need targeted support, and the new framework should focus on helping those who would otherwise struggle to access guidance, said Levin.
“The FCA’s renewed focus on simplified advice is another important development. While targeted support is designed for groups, simplified advice offers a more personalised recommendation based on essential facts about an individual’s specific need – without the complexity or cost of holistic advice.
“The FCA acknowledges that previous efforts to encourage streamlined advice have fallen short, often due to regulatory ambiguity and firms’ concerns about liability. This consultation proposes clearer rules and a distinct regulatory identity for simplified advice, aiming to give firms the confidence to offer focused, affordable recommendations.”
Simplified advice won’t suit every consumer or every situation, and that must be made clear. But it could play a vital role in helping those with straightforward needs, such as investing a lump sum or increasing pension contributions – access timely, tailored support without the burden of a full fact-find, he said.
Making better choices
The FCA’s accompanying behavioural research chimes with Quilter’s findings conducted for the regulator’s policy sprint for this consultation and highlights why this matters, said Levin.
“In pensions, consumers were more likely to trust and act on suggestions when paired with clear, well-explained information – especially when it was clear they weren’t receiving advice. Those with lower financial literacy were often more inclined to act on targeted support suggestions even when their understanding was more limited.”
This highlights a valuable opportunity – well-designed communications can empower action among groups traditionally underserved by financial advice, he said.
“However, it also reinforces the importance of ensuring that these communications are clear, transparent, and supported by appropriate safeguards to protect consumers and build trust.
“This is the most progressive proposal in this area for years, reflecting a shift toward more outcomes-focused regulation that supports innovation and consumer engagement. Targeted support won’t replace full advice – and nor should it – but it could become a vital stepping stone on the path to comprehensive financial planning.”
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